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Taxes and Subsidies in Vertically Related Markets

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  • Marion Desquilbet
  • Hervé Guyomard

Abstract

In the framework of a two-country, two-good partial equilibrium model where one of the commodities (the bulk commodity) is an intermediate input in the production of the second good (the processed good), we assume that the government wishes to transfer income to both bulk commodity and processed good producers. Our analysis is concerned with efficient redistribution. The instruments are subsidies or taxes, and there is an opportunity cost of public funds. We use the targeting principle to characterize the set of optimal subsidies or taxes applied on both the bulk commodity and the final good in this vertically related market structure. The theoretical analysis is illustrated using the example of cereals (the bulk commodity) and pork and poultry (the processed good) in the European Union. Copyright 2002, Oxford University Press.

Suggested Citation

  • Marion Desquilbet & Hervé Guyomard, 2002. "Taxes and Subsidies in Vertically Related Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1033-1041.
  • Handle: RePEc:oup:ajagec:v:84:y:2002:i:4:p:1033-1041
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00051
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    1. Lynch, Lori & Brown, Cheryl, 2000. "Landowner Decision Making About Riparian Buffers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(03), December.
    2. Chakravorty Ujjayant & Hochman Eithan & Zilberman David, 1995. "A Spatial Model of Optimal Water Conveyance," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 25-41, July.
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    4. Eithan Hochman & David Pines & David Zilberman, 1977. "The Effects of Pollution Taxation on the Pattern of Resource Allocation: The Downstream Diffusion Case," The Quarterly Journal of Economics, Oxford University Press, vol. 91(4), pages 625-638.
    5. Miranowski, John & Cochran, M., 1993. "Economics of Land in Agriculture," Staff General Research Papers Archive 10722, Iowa State University, Department of Economics.
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    Cited by:

    1. Pavel Ciaian & d’Artis Kancs & Johan Swinnen, 2010. "EU Land Markets and the Common Agricultural Policy," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 53(3), pages 1-31.
    2. Jerzy Michalek & Pavel Ciaian & d’Artis Kancs, 2014. "Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union," Land Economics, University of Wisconsin Press, vol. 90(2), pages 260-289.
    3. Pavel Ciaian & d'Artis Kancs & Sergio Gomez y Paloma, 2010. "Distributional Effects of CAP Subsidies: Micro Evidence from the EU," EERI Research Paper Series EERI_RP_2010_05, Economics and Econometrics Research Institute (EERI), Brussels.
    4. Rickard, Bradley J. & Sumner, Daniel A., 2011. "Was there policy "reform"? Evolution of EU domestic support for processed fruits and vegetables," Food Policy, Elsevier, vol. 36(3), pages 438-449, June.
    5. Pavel Ciaian & D'Artis Kancs & Johan Swinnen, 2014. "The Impact of the 2013 Reform of the Common Agricultural Policy on Land Capitalization in the European Union," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 36(4), pages 643-673.
    6. Pavel Ciaian & d'Artis Kancs & Maria Espinosa, 2016. "The Impact of the 2013 CAP Reform on the Decoupled Payments' Capitalization into Land Values," JRC Working Papers JRC101619, Joint Research Centre (Seville site).
    7. Timothy A. Wise, "undated". "05-07 "Identifying the Real Winners from U.S. Agricultural Policies"," GDAE Working Papers 05-07, GDAE, Tufts University.
    8. Pavel Ciaian & d'Artis Kancs & Jo Swinnen, 2008. "Static and Dynamic Distributional Effects of Decoupled Payments," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 20-47.

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